Tax deal apologist that I am, it behooves me to offer some constructive criticism, too, along with a reminder that this deal isn't final until the legislative process makes it so: Congressional Democrats, unable to unify around an original proposal, may try and adapt this framework. Here are a few changes they want:
- Rep. Jan Schakowsky, a member of the president's fiscal commission who produced her own left-leaning budget plan, told the Prospect she wants to see $200 payments to Social Security benificiaries who didn't receive a cost-of-living adjustment this year thanks to our problematically slow-growing -- veering deflationary -- inflation rate. Payments like these were included in the 2009 stimulus act and proved to be effective stimulus.
- Senator Ron Wyden, an ardent proponent of comprehensive tax reform, says he would prefer a deal including "one year extension to trigger tax reform. ... [an] extension that would trigger congress being required to do tax reform in 2011, and to have it done by December 31, 2011. I'm not for the Bush tax cuts at all, but I'd be willing to go along with a one year extension." Given the challenges of legislating during an election year like 2012, he believes the best chance of comprehensive tax reform is setting a time-line to force Congress' hand.
- Rep. Chris Van Hollen, slated to be the Democrats' ranking member on the House Budget Committee, was irked by the estate tax rate set by the deal. Currently, the estate tax is scheduled to return in 2011 at a rate of 55 percent applied to any estate over $1 million. Most Democrats hoped to return to 3.5 million exemption taxed at a 45 percent rate. Nonetheless, Republicans, lead by Senator John Kyl and supported by conservative Democrats like Senator Blanche Lincoln, won their proposal of a $5 million exemption, 35 percent rate.
It wasn't much of a compromise, leading Van Hollen to comment that the White House "just went all in with Senator Kyl's long-time effort to get a super bonanza for the wealthiest estates in the country. That did not have to be a part of this deal, and it should not be part of this deal."
One other understanding that should be reached as part of this deal is on next spring's debt ceiling vote, a typically-routine vote where Congress gives the go-ahead to borrow enough money to cover the budget. Some Republicans are threatening to oppose the measure, raising fears about a potential default. After this plan, which will require more short-term borrowing -- appropriate for fiscal stimulus during tough economic times -- that vote takes on even more importance. Democrats are counting on Republicans to act responsibly when they have the responsibility to govern next year, but some public statements from their leadership couldn't hurt to build confidence.
Many observers see heavy Republican support pushing this deal over the top, but Congressional Democrats have yet to concede. If they can force changes in the deal, these are four important ideas.
-- Tim Fernholz